Bloomberg News

Futures Slide as Mass Anti-Putin Rally Planned: Russia Overnight

December 09, 2011

Dec. 9 (Bloomberg) -- Russian stock futures slid and U.S.- traded shares retreated after oil fell and concern grew that anti-government protests in Moscow will fan political unrest.

Futures expiring in December on the dollar-denominated RTS index tumbled 2.4 percent to 143,170 yesterday in U.S. trading, while the Bloomberg Russia-US 14 Index of Russian companies listed in New York dropped 2.5 percent to 93.48, a two-week low. Mobile-phone provider VimpelCom Ltd. led decliners after Bank of America Corp.’s Merrill Lynch downgraded the stock, and coal producer OAO Mechel fell to as metal prices dropped.

Thousands of people have taken to Moscow streets to protest the result of the Dec. 4 parliamentary election, which was marred by complaints of violations and ballot-stuffing. The Solidarity movement, an umbrella opposition group, has planned a rally tomorrow near the Kremlin. Prime Minister Vladimir Putin’s United Russia party lost 12 million votes, or more than a quarter of the support it garnered four years ago. Urals crude, Russia’s chief export blend, hit a two-week low.

“Russian politics has become an issue, and for investors, that’s something new, and for some people, it does create uncertainty,” Martin Diggle, director of the $70 million Vulpes Russian Opportunities Fund, said in a phone interview from Geneva. “Europe remains a drag on stocks, and oil is also down.”

Putin said yesterday comments by U.S. Secretary of State Hillary Clinton accusing Russia of rigging last weekend’s Duma vote provoked the post-electoral unrest, which has seen hundreds arrested.

Rusal Declines

The RTS Volatility Index, which measures expected swings in the index futures, rose for a fifth consecutive day, increasing 3.4 percent to 54.19 points. The Standard & Poor’s 500 Index, which trades at the same time as RTS futures, lost 2.1 percent to 1,234.35 by 4 p.m. in New York yesterday.

The RTS index gained 0.4 percent to 1,473.56 and the benchmark 30-stock Micex index gained 0.6 percent to 1,456.36.

United Co. Rusal, the world’s largest aluminum producer, dropped 1.5 percent to HK$5.39 in Hong Kong trading as of 11:28 a.m. local time. The MSCI Asia Pacific Index sank 1.8 percent as the European Central Bank damped speculation it would step up debt purchases and amid concern industrial production data today will show China’s economic growth slowed.

Crude for January delivery lost 0.6 percent to $97.80 a barrel in after-hours trading on the New York Mercantile Exchange. Futures sank 2.1 percent yesterday, while urals crude lost 1.7 percent to $107.57, the lowest level since Nov. 25.

Copper, Gold

Brent oil for January settlement declined 1.3 percent to $108.11 a barrel on the London-based ICE Futures Europe exchange. Oil and natural gas contribute about 17 percent of Russia’s gross domestic product.

Standard & Poor’s GSCI index of 24 raw materials fell 1.2 percent to 645.98 as copper and gold slumped. Copper declined the most in two weeks, dropping 1.6 percent to close at $3.50 a pound on the Comex in New York, while gold futures for February delivery slipped 1.8 percent, the most in two weeks, to $1,713.40 an ounce on the Comex.

VimpelCom’s American depositary receipts traded in New York plunged 5.7 percent, the most since Sept. 22, to $10.42, as the company’s shares were downgraded to “neutral” from “buy” by Bank of America Merrill Lynch, Theflyonthewall.com reported. The bank’s policy is not to release its research reports to the media, said Rinat Rond, a spokeswoman at the bank’s office in New York.

VimpelCom Debt

The Amsterdam-based company’s financing costs could be driven higher because of the European debt crisis, Victor Klimovich, analyst in Moscow at VTB Capital, the investment banking arm of Russia’s second-largest lender, said in a phone interview yesterday.

VimpelCom has $1.42 billion of debt coming due next year and in 2013, according to data compiled by Bloomberg.

London-based Polyus Gold International Ltd., Russia’s largest gold miner, rose the most on the Bloomberg Russia-US 14 index, gaining 5.3 percent to $3.

The company may sell treasury stock to increase its free float and qualify for a London primary listing, Kommersant newspaper in Moscow reported, citing Dmitri Razumov, chief executive officer of Onexim Holding, which controls about 36 percent of the miner.

OAO Surgutneftegas, a Russian oil producer, climbed 0.2 percent to $5.26 in New York, rising for the first time in three days. Micex-traded preferred shares of the company rose 0.6 percent to 16.61 rubles, the equivalent of 53 cents. One ADR is worth 10 shares.

Case Delayed

Russia’s federal anti-monopoly service postponed a case against Surgutneftegas and its oil refining subsidiary OOO KINEF until Jan. 13, the Moscow-based Interfax newswire reported, citing a statement from the government agency. The case was initiated last month on allegations the company may have broken anti-monopoly law, Interfax said.

ADRs of Mechel, Russia’s largest coal producer for steelmakers, declined 5 percent to $9.71, the lowest level since Nov. 29, after shares in Moscow slipped 1.3 percent to 317.60 rubles, or the equivalent of $10.10.

Yandex NV, operator of Russia’s most popular Internet search engine, fell 6 percent to $20.50 yesterday, dropping the most since Nov. 21.

Credit Suisse AG rates Yandex stock “underperform” and expects Russia’s advertising market to stop growing next year in dollar terms, after gaining about 20 percent in 2011, from 2010.

“We are cautious on the ad market outlook for next year in Russia and are also concerned Yandex will continue to lose market share to Google over the coming year due to proliferation of Android-based smart phones rising,” Zoltan Palfi, a London- based analyst at Credit Suisse, said by e-mail yesterday.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, retreated 4.1 percent to $27.87, while the Bank of New York Mellon Russia ADR Index dropped 2.6 percent to 749.20.

--With assistance from Darren Boey in Hong Kong. Editors: Emma O’Brien, Marie-France Han

To contact the reporters on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net; Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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